Mortgage won’t do

The banks while lending to industries insist on land mortgage as additional security.

But now courts have ruled that government dues like sales tax have first charge on all assets of the defaulting dealers.

This ruling has denied banks their first claim on mortgaged land as security and the only tangible secutiry available for banks has been taken away from them.

Now the RBI and banks will have to rethink on lending policy as there will be no security in case of default and invariably borrowers default in payment of sales tax, workers' PF and gratuity, ESIC dues and all these dues rank first as land dues to govt.

Now the time has come for banks to insist on transfer of land in its name at the time of lending, instead of mortgage so that sales tax and other dues will not have first charge. Otherwise banks will further run into deep trouble.